Canada Exempts 41 Agencies from Sustainability Act: What Grant Seekers Need to Know

Hook

In a significant shift for Canadian federal sustainability policy, 41 organizations were officially removed from the reporting requirements of the Federal Sustainable Development Act (FSDA), effective February 25, 2026. This order, detailed in the Canada Gazette, aims to trim administrative burden by exempting agencies considered minimally relevant to the government’s sustainability pillars. For those seeking grants—from researchers to nonprofits—this change could reshape which entities drive or evaluate sustainable development funding priorities in the coming cycles.

Context

The Federal Sustainable Development Act, introduced in 2008 and expanded in 2020, is the backbone of Canada’s whole-of-government strategy for environmental, social, and economic sustainability. The 2020 amendments broadened the number of designated entities from 28 to 99—now up to 100 by 2024—to ensure comprehensive public sector participation in the Federal Sustainable Development Strategy (FSDS). But while this approach looked good on paper, in practice many organizations—particularly small agencies and those serving security or procedural functions—struggled to produce meaningful contributions within the strict reporting frame.

A 2023 review of Departmental Sustainable Development Strategies (DSDSs) revealed negligible impact from many smaller actors, highlighting the issue of resource allocation versus actual sustainability outcomes. Responding to these findings, the government consulted stakeholders and opted for a pragmatic course: remove, or exempt, entities whose mandates showed little alignment with the FSDS, saving them from unnecessary reporting while maintaining focus where impact is highest.

Impact

For Grant Seekers in Research and Academia

The most immediate consequence is a likely narrowing of focus within sustainability grant programs run or managed by exempted agencies. Previously, some research and community groups targeted calls or partnerships through entities now exempted from FSDA reporting—such as the Copyright Board, Office of the Commissioner of Official Languages, or the Canadian Grain Commission. With these agencies no longer under FSDA mandates, their emphasis on sustainability in funding and evaluation criteria may diminish or disappear altogether. Researchers should closely monitor which federal organizations remain accountable to the FSDA (now 59, down from 100) when aligning proposals with government priorities.

For Nonprofits and Small Businesses

Organizations that framed applications around all-of-government sustainable development messaging will need to recalibrate. Some grant competitions or procurement opportunities (e.g., green procurement) may be handled through different mechanisms outside the Act, but the broad sustainability integration formerly expected is likely to become more targeted. Entities like the Financial Consumer Agency of Canada and Immigration and Refugee Board are now out; applicants should expect less emphasis on FSDS alignment in their calls.

For Indigenous and Community Programs

While this order does not materially affect targeted Indigenous and fiscal innovation entities—no changes were made to expanding or reducing First Nations-specific fiscal tools—the broader context emphasizes efficiency during a period of government belt-tightening. Restrictions on which agencies are obliged to tie funding to the FSDS may affect how sustainability is framed in some programs, leading to a more nuanced approach tailored to core-mandate agencies.

Action

What should grant seekers do now?

• Review your portfolio: Identify whether past or current funding partners are among the 41 exempted organizations (see official list in the Gazette) and adjust your grant calendars accordingly.
• Align proposals: Focus new or renewing proposals toward the 59 remaining FSDA-accountable entities, emphasizing how your work advances the FSDS pillars—environmental, social, economic—when it counts most.
• Recalibrate sustainability messaging: For competitions run by newly-exempted organizations, shift the emphasis of your proposal from broad FSDS objectives to more tailored impacts relevant to the agency’s core mission.

Outlook

This targeted exemption is part of a wider government drive for efficiency. Budget cycles and policy reviews may prompt further adjustments: watch for new reporting guidance, revised sustainability priority sectors, and announcements related to funding criteria in the 2026-2027 fiscal year. For grant seekers, staying flexible and attuned to agency mandates will be more important than ever as the sustainability landscape becomes more focused.

Granted AI keeps you updated on major funding policy changes and offers tools for rapidly aligning your proposals with evolving agency priorities.